Gentler IRS Misses a Lot

Published 4:00 am, Sunday, April 15, 2001

AMERICANS have mixed feelings about how effectively they want the Internal Revenue Service to do its work. No one wants to be pushed around by overzealous agents. Bureaucratic thugs can destroy a taxpayer's business or personal life in the course of collecting on a past-due bill.

Many citizens cherish the hope that a slight exaggeration of deductible items will slide through the IRS computers without touching off alarms. If the IRS isn't looking, in the view of the typical fudger of literal truth, that's to the good.

The more sensible and far-seeing of us, of course, want the IRS to do a fair and thorough job -- even as we face tomorrow's deadline for income-tax returns. We count on the revenuers to round up funds to guard the nation's security and provide federal services and benefits. We just don't want to be faced with an undue share of the cost.

But the IRS at times has turned its useful role into that of a stage villain. Horror stories about IRS operatives brow-beating scared and innocent taxpayers dominated congressional discussion of the agency's performance in 1997 and 1998. This led to legislation to protect citizens from such abuse, and to IRS reforms making the agency more friendly to the paying public. Another result: a general dwindling of enforcement activity.

The IRS is not trying as hard to collect the money Uncle Sam says is due. New data show that enforcement efforts have shrunk by half since the early 1990s. Fewer IRS personnel are working to uncover violations of the tax law. They are auditing tax returns less often, last year subjecting only 0.19 percent of taxpayers nationally to this intense scrutiny. (Northern Californians got audited more frequently, but still only 0.42 percent of the time.)

Cheers over this evidence of a less fearsome IRS should be muted by word that, while we revel in federal surpluses and promised tax cuts, tax fraud in this permissive era is robbing the nation of an estimated $300 billion a year. At a U.S. Senate hearing this month, IRS Commissioner Charles Rossotti acknowledged the high rate of fraud, including hundreds of schemes promoted on the Internet by con artists.

Is that $300 billion -- about a third of the total paid by individuals last year -- important to the rest of us? U.S. Sen. Max Baucus, D-Mont., put it this way: "We could afford a large tax cut, a larger prescription drug program for seniors and pay down the national debt just by cracking down on these six- figure tax frauds."

The IRS does not have to harass any more little guys down on their luck in order to recapture billions from well-off tax cheats.